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Tag Archives: MNPI

SEC Risk Alert Highlights Renewed Focus on Insider Trading and MNPI Policies and Procedures for Fund Managers

By Joshua M. Newville on Posted in Asset Management, Compliance, Enforcement, Examinations, SEC, Securities Law
Last month, we predicted that a renewed focus by the SEC on insider trading, MNPI and related internal controls would be one of the Top Ten Regulatory and Litigation Risks for Private Funds in 2022. Last week, the SEC’s Division of Examinations (“EXAMS”) issued a timely risk alert relating to Investment Adviser Material Non-Public Information … Continue Reading

Insider Trading, MNPI and Related Internal Controls: A Renewed Focus by SEC

By Steven Baker, Margaret A. Dale, Michael R. Hackett, William Komaroff, Kirsten E. Lapham, Dorothy Murray, Timothy W. Mungovan, Joshua M. Newville, Todd J. Ohlms, Seetha Ramachandran, Jonathan M. Weiss, Julia Alonzo, James Anderson, Julia M. Ansanelli, William D. Dalsen, Adam L. Deming, Reut N. Samuels and Hena M. Vora on Posted in Compliance, Enforcement, Examinations, Private Equity, Regulation, SEC, Securities Law
Over the past few years, the SEC has brought fewer insider trading and Material Non-Public Information (MNPI)-related cases compared to historical numbers. We expect to see a reversal of that trend in 2022. The SEC has provided some hints of its renewed focus on insider trading. First, even though the overall number of insider trading … Continue Reading

Top Ten Regulatory and Litigation Risks for Private Funds in 2022

By Steven Baker, Margaret A. Dale, Michael R. Hackett, William Komaroff, Kirsten E. Lapham, Timothy W. Mungovan, Dorothy Murray, Joshua M. Newville, Todd J. Ohlms, Seetha Ramachandran, Jonathan M. Weiss, Julia Alonzo, James Anderson, Julia M. Ansanelli, William D. Dalsen, Adam L. Deming, Reut N. Samuels and Hena M. Vora on Posted in Asset Management, Compliance, Cryptocurrency, Cybersecurity, Disputes, Enforcement, Examinations, Hedge Funds, Private Credit, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, SPACs, White Collar
Last year, we wrote, “The regulatory and litigation risks for private funds are greater than at any time since the financial crisis in 2008.” That statement is even more true today. The Wall Street Journal recently published separate front-page stories on an SEC initiative to oversee large private companies and the explosive growth of the private … Continue Reading

California District Court Upholds SEC’s Novel “Shadow Trading” Theory

By Robert Leonard, Michael Mavrides, Joshua M. Newville, Jonathan Richman, Christopher Wells and Julia Alonzo on Posted in Disputes, Enforcement, Hedge Funds, Private Equity, SEC, Securities Law
The SEC prevailed on a motion to dismiss a closely watched lawsuit alleging that a company employee had engaged in insider trading based on news about a not-yet-public corporate acquisition when he purchased securities of a third-party company that was not involved in the deal. The January 14, 2022 decision in SEC v. Panuwat (N.D. … Continue Reading

MNPI Update – SEC Pursues “Shadow Trading” Insider Trading Case

By Michael Mavrides, Robert Leonard, Joshua M. Newville, Jonathan Richman and Samuel J. Waldon on Posted in Disputes, Enforcement, Hedge Funds, Private Equity, SEC, Securities Law, White Collar
The SEC recently charged a former employee of a biopharmaceutical company with insider trading in advance of an acquisition but with a unique twist: Trading the securities of a company unrelated to the merger. The employee, Matthew Panuwat, did not trade his own company’s or the acquiring company’s securities, but instead purchased stock options for … Continue Reading

Three Key Considerations for Fund Sponsors when Participating in Bankruptcy Proceedings

By Joshua M. Newville, Samuel J. Waldon and Erica T. Jones on Posted in Asset Management, Compliance, Disputes, Enforcement, Examinations, Private Equity, Regulation, SEC, Securities Law
We anticipate a more assertive regulatory enforcement program under the Biden administration, particularly focused on fund managers’ conflicts of interest, advisers’ codes of ethics, and related policies and procedures relating to material nonpublic information.  These concerns may be heightened for fund managers participating in bankruptcy proceedings, where competing fiduciary obligations arise, particularly in the context … Continue Reading

Second Circuit Upholds Insider Trading Conviction, Finding Sufficient Confidentiality Duty and Personal Benefit

By Jonathan Richman on Posted in Enforcement, SEC, Securities Law, White Collar
Last week, the Second Circuit upheld a criminal conviction for insider trading, holding that signing a Non-Disclosure Agreement (NDA) with a target company created a sufficient duty of trust and confidence to support a conviction. The defendant in United States v. Chow, an executive at a foreign private equity firm, was convicted for tipping a … Continue Reading

House Passes Proposed Legislation Defining Insider Trading

By Jonathan Richman and Joshua M. Newville on Posted in Compliance, Hedge Funds, SEC, Securities Law
Since the Second Circuit’s 2014 decision in United States v. Newman triggered a debate about the personal benefit requirement, several bills have been introduced in Congress to define insider trading. The most recent effort is H.R. 2534, the Insider Trading Prohibition Act, which the House of Representatives passed overwhelmingly last week. The bill would codify certain … Continue Reading

Proskauer Private Investment Funds Group Releases 2019 Annual Review and Outlook

By Anthony M. Drenzek on Posted in Compliance, Disputes, Hedge Funds, OCIE, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
Proskauer’s Private Investment Funds Group recently released its 2019 Annual Review and Outlook for Hedge Funds, Private Equity Funds and Other Private Funds. This yearly publication provides a summary of some of the significant changes and developments that occurred in the past year in the private equity and hedge funds space, as well as certain … Continue Reading

Proskauer Private Investment Funds Group Releases 2018 Annual Review and Outlook

By Anthony M. Drenzek on Posted in Compliance, Hedge Funds, OCIE, Private Equity, Private Equity Litigation, Regulation, SEC, Securities Law, Venture Capital
Proskauer’s Private Investment Funds Group today released its 2018 Annual Review and Outlook for Hedge Funds, Private Equity Funds and Other Private Funds.  This yearly publication provides a summary of some of the significant changes and developments that occurred in the past year in the private equity and hedge funds space, as well as certain recommended … Continue Reading

WSJ Article on Geolocation Data Highlights Risks for Fund Managers

By Joshua M. Newville and Jeffrey Neuburger on Posted in Compliance, Hedge Funds, Regulation
On Friday, the WSJ published an article detailing how companies are monetizing smartphone location data by selling it to hedge fund clients.  The data vendor featured in the WSJ article obtains geolocation data from about 1,000 apps that fund managers use to predict trends involving public companies.  However, as we’ve noted, the use of alternative … Continue Reading

Bharara Task Force on Insider Trading

By Joshua M. Newville and Samuel J. Waldon on Posted in Compliance, Hedge Funds, Regulation, SEC, Securities Law
Former SDNY U.S. Attorney Preet Bharara and SEC Commissioner Jackson recently announced, via NY Times op-ed, the creation of the Bharara Task Force on Insider Trading.  Based on the premise that U.S. insider trading laws are unclear and hopelessly out of date, the task force intends to propose new insider trading reforms to help clarify … Continue Reading

Best Practices for Fund Managers to Mitigate Big Data and Web Scraping Risks

By Joshua M. Newville, Jeffrey Neuburger, Robert Leonard and Jonathan Richman on Posted in Hedge Funds, Regulation, SEC, Securities Law
Proskauer partners Jeff Neuburger, Robert Leonard, Josh Newville and Jonathan Richman recently invited hedge fund executives to discuss the complex regulatory and compliance issues raised by the use of alternative data.   Jeff, Robert and Josh also contributed an article to the Hedge Fund Law Report on Best Practices for Private Fund Advisers to Manage the Risks of … Continue Reading
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